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Suppose that in exchange for allowing a road to pass through his farmland, George Pequod has been paid $135 per year by the township he lives in.

He had been promised that he and future owners of his land would receive this payment in perpetuity.

Now, however, the township has offered, and he has accepted, a one-time payment of $1,125 in exchange for his giving up the right to receive the annual $135 payment.

What implicit interest rate have George and the township used in arriving at this settlement?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92060134

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